LONDON MARKET MIDDAY: US CPI, ECB in focus; NI row rumbles as G7 meets

Thu, 10th Jun 2021 12:18

(Alliance News) -Â The FTSE 100 edged up on Thursday but stocks traded in a narrow range ahead of US inflation and a European Central Bank interest rate decision soon after midday in London.

The internationally exposed FTSE 100 index was helped as the pound pulled back on a row over post-Brexit trade rules for Northern Ireland, which threatens to engulf this weekend's G7 summit, while the pound's slip and concern about the situation hit the more domestically-focused FTSE 250.

The FTSE 100 index was up 22.64 points, or 0.3%, at 7,103.65 midday Thursday. The mid-cap FTSE 250 index was down 99.83 points, or 0.4%, at 22,659.14. The AIM All-Share index was down 0.5% at 1,242.95.

The Cboe UK 100 index was up 0.3% at 707.95. The Cboe 250 was down 0.7% at 20,387.23, and the Cboe Small Companies down 0.3% at 15,133.71.

In mainland Europe, the CAC 40 in Paris was down 0.1%, while the DAX 30 in Frankfurt rose 0.2% in the afternoon on Thursday.

Moves were muted as markets await the US data and ECB decision.

AJ Bell investment director Russ Mould said: "US inflation figures could set the tone for the rest of the month, let alone the rest of the day when they are released later. A higher-than-expected number could put the markets back in panic mode over rising prices."

The US consumer price index for May is due at 1330 BST.

Consensus, according to FXStreet, expects the consumer price index to rise 4.7% year-on-year in May, picking up pace from 4.2% in April. A reading over 5% would raise concern that the US Federal Reserve, which meets next week, could start to mull monetary policy tightening sooner than expected - even though the central bank has insisted that recent price strength is only temporary.

Mould added: "The European Central Bank meets later with little expectation of any change in emphasis let alone policy, but any sign that the ECB might seek to taper its support for the economy could also provoke a shock."

No change in policy is expected from the European Central Bank when its announces its latest interest rate decision at 1245 BST, with focus lying on any mention of tapering.

ECB President Christine Lagarde is sure to be quizzed over whether rate setters have discussed easing asset purchases when she attends a press conference following the rate decision at 1330 BST.

The euro traded at USD1.2169 on Thursday ahead of the decision, down from USD1.2186 late Wednesday.

Elsewhere among currencies, the yen strengthened. The dollar eased to JPY109.49 from JPY109.60.

Sterling was quoted at USD1.4099 on Thursday, lower than USD1.4120 at the London equities close on Wednesday as a row over post-Brexit trade rules for Northern Ireland threaten to derail UK Prime Minister Boris Johnson's G7 summit this weekend.

European Commission President Ursula von der Leyen confirmed Thursday that she would bring up the situation when she and fellow EU chief Charles Michel meet Johnson.

The Northern Ireland issue has also drawn the ire of US President Joe Biden. In the president's first overseas visit, aides said he will stress the need to "stand behind" the Northern Ireland Protocol, the element of the Brexit deal which has triggered a UK-EU dispute.

Aside from Brexit, Johnson and Biden will work on efforts to resume transatlantic travel. They also will agree a new Atlantic Charter, paving the way for co-operation on challenges including climate change and security. But Biden's close interest in issues affecting Ireland will mean that the dispute over the protocol will feature heavily in discussions with the UK and EU over the coming days of intense diplomatic activity in Cornwall.

In London, travel stocks failed to get a tailwind from the efforts to resume transatlantic travel, with British Airways-parent International Consolidated Airlines dipping 1.2% at midday. The plans have been dismissed by industry leaders as lacking "clarity".

At the top of the FTSE 100 was Auto Trader, rising 6.7% as it posted a substantial drop in annual earnings and revenue but gave an optimistic outlook.

The online automotive marketplace posted a 29% fall in revenue to GBP262.8 million for the financial year that ended March 31 from GBP368.9 million. Trade revenue declined 31% to GBP225.2 million following a decision to provide free advertising to retailer customers in April, May, December and February and at a discounted rate in June.

Auto Trader's pretax profit slumped 27% to GBP157.4 million.

However Auto Trader has decided to reinstate its capital allocation policy and proposed a final dividend of 5.0 pence, versus no payout a year ago. With no interim dividend, this 5p will be the total dividend for the year, up from 2.4p the year before.

BT Group shares advanced 3.0% on news that Patrick Drahi's Altice has bought a 12% stake in the telecommunications firm.

BT is in a position to "deliver one of the UK government's most important policies" in expanding broadband networks, and benefits from a regulatory framework which offers it incentives to invest, Altice UK said.

Altice UK is a new company wholly owned by billionaire Altice Europe founder Drahi. Altice UK is separate from Altice Europe and Altice USA, but benefits from their "expertise and experience", the statement said.

Drahi's company said it holds BT's management in high regard and supports their strategy. It does not intend to make an offer for the whole company, a binding statement under UK takeover rules.

Shares in precious metals miner Fresnillo eased as gold prices fell. In commodities, gold was quoted at USD1,880.16 an ounce on Thursday, lower than USD1,890.50 on Wednesday.

Brent oil prices recovered, meanwhile, with the North Sea benchmark trading at USD72.41 a barrel, firm on USD72.36 late Wednesday.

In the FTSE 250, Mitie Group rose 7.9% as the facilities management company swung to an annual loss but forecast its future performance to be better than original expectations following new contract wins.

Mitie posted a pretax loss of GBP9.1 million for the financial year that ended March 31, swung from a GBP48.4 million profit the year before. Looking ahead, though, Mitie said its outlook for financial year 2022 was anticipated to be "materially ahead" of prior expectations.

DFS Furniture shares climbed 13% as it reported total order intake in fourth quarter to date up 92% on the same period in the 2019 financial year, driven by pent-up demand as showrooms opened post-lockdown.

The sofa retailer said it is on course to achieve underlying pretax profit of at least GBP105 million in the 2021 financial year, and revenue and profit from recent strong order intake will be recognised in financial 2022.

"Despite short-term supply chain challenges and a macro environment that's hard to read, we believe the business is well set for growth, to be delivered in both a responsible and sustainable manner," said Chief Executive Tim Stacey.

By Lucy Heming;Â lucyheming@alliancenews.com